updated 06:00 pm EST, Mon January 18, 2010

Xbox may rival Apple TV, cable through live shows

Microsoft is hoping to gain an edge in networked media hubs by offering live sports through the Xbox 360, a leak on Monday maintains. The console's originator is reportedly in significant talks with Disney to stream ESPN's feeds of live TV shows through the system. Users would pay for a subscription and get access to many if not most events through Internet feeds.

To complement the service, Microsoft might develop tie-in games for ESPN, according to the New York Times source, although the company and Disney are still in the middle of talks and may alter this or many other details.

The initiative would be part of a larger strategy that has already included some live TV or TV-like events, such as Sky broadcasts on the Xbox in the UK and the 1 vs. 100 live game show. Microsoft's Mediaroom has also been linked to the Xbox 360 and would give gamers their IPTV service through their consoles, though it has yet to see significant use.

Microsoft has declined to clarify the ESPN rumor but does admit that it wants "as much content [on the Xbox] as possible."

The strategy if realized would be a differentiating factor as Microsoft not only hopes to compete with the PlayStation 3 but also dedicated media hubs like Apple TV and Roku's Internet Player. These devices, as well as North American Xbox 360s, still focus almost exclusively on pre-recorder content, such as rentals from the iTunes Store and Zune Video Marketplace or on-demand viewing from Amazon and Netflix.

Apple may be indirectly stepping up pressure on Microsoft as rumors have circulated of an iTunes TV subscription in negotiations that would supply downloads of most TV shows for a flat monthly rate. Disney is allegedly one of the earliest to tentatively agree and has an Apple connection through Steve Jobs' presence on the Disney board of directors.